The Maldives Monetary Authority (MMA) has reported an improvement in the country's foreign exchange reserves, with total reserves reaching USD 981 million by the end of February. 

Usable reserves stand at USD 179 million after necessary financial deductions.

According to data from MMA, the official reserve assets rose to USD 832.1 million at the end of February, marking a 17.5 per cent increase from USD 708.1 million recorded in January. In addition to these official reserve assets, MMA’s investments in local banks added USD 149.6 million to other foreign exchange assets. Combined, these figures brought total reserves to USD 981.7 million.

However, a significant portion of these reserves—USD 802.6 million—was allocated for short-term financial obligations, leaving the state with USD 179 million in usable reserves at the close of February.

The recovery of reserves was notably influenced by a USD 400 million currency swap arrangement between the MMA and the Reserve Bank of India. This financial intervention played a crucial role in stabilising the reserves and reversing previous declines.

Further strengthening of the reserves followed MMA’s decision to open the dollar supply to banks in January, in line with foreign exchange regulations introduced in October of the previous year. Increased dollar deposits from the tourism sector—surpassing initial MMA estimates—also contributed to a rise in foreign exchange availability through banks, though this had previously strained state reserves.

The sharp decline in reserves had been a key factor in the country’s credit rating downgrade. However, financial experts suggest that the recent improvements, driven by Government measures, could lead to a potential upgrade in the country’s credit rating if the recovery trend continues